Green Deal diplomacy needs to be in focus in 2021

This article builds on an event on EU environmental sovereignty hosted by IEEP at the second Think2030 conference in November 2020, discussing insights from a policy paper by the European Council for Foreign Relations (ECFR) and Bruegel published in 2021.

A window of opportunity. That is a good description of the coming months of global environmental policy, with the US re-joining the Paris Agreement and with the postponed climate and biodiversity Conferences of Parties (COPs) on the agenda.

A big share of the responsibility for turning opportunities into a reality relies on the European Union’s shoulders, building on the policy reforms envisaged in and initiated by the European Green Deal.

The EU now needs to recognise that the Green Deal is, effectively, a foreign policy

However, to achieve results, the EU now needs to recognise that the Green Deal is, effectively, also a foreign policy with its global impacts not restricted to the dedicated external components of the Deal but with internal policy reforms also having a range of consequences outside the EU.

Consequently, there is a need for a more holistic diplomatic approach to implementing the Green Deal than perhaps considered, with Ursula von der Leyen's ambitions of a geopolitical Commission needed to be reflected in a coherent strategy for the external aspects of the Green Deal. The conclusions on climate and energy diplomacy adopted by Foreign Ministers in January is a significant step, but more remains to be done.

Diplomacy to address external impacts of EU’s internal policies

In a longer time perspective, the transition to a net-zero economy will cause changes in the European Union's economic and trade relations to other parts of the world. For example, a recent policy paper by the European Council of Foreign Relations and Bruegel highlights that countries such as Algeria and Russia are strongly dependent on exports of gas and oil to the EU. This should be met with offers for deeper cooperation that explore opportunities for a different, more sustainable trade relationship. The EU neighbourhood policy needs to put more emphasis on such aspects.

The EU needs to safeguard and further develop its proven ability to be a global environmental and sustainability standard-setter and, through that, a market creator

In addition to the climate and energy policy objectives, the EU Green Deal also includes other key internal policy elements that will have geopolitical implications. These include the EU’s shift to a circular economy and the accompanying comprehensive policy package and the EU goal for only deforestation-free products to be placed on the EU market. Both these policy agendas will result in changes to products imported into the EU, not only those produced in the EU. Similar to the above, the EU needs to enter into dialogues with partner countries to assess the impacts of the EU’s shift to a circular and deforestation-free economy and identify how the EU development cooperation and trade policies can help partner countries to take up opportunities in the context of the new EU model.

Across all of the above aspects (climate and energy, circular economy, chemicals, deforestation-free value chains …) the EU needs to safeguard and further develop its proven ability to be a global environmental and sustainability standard-setter and, through that, a market creator. This is a key mechanism for the EU to support the implementation of the Green Deal and manage the changes in the geopolitical context, with a foreseen positive outcome globally.

Rekindling cooperation with the US …

The election of Joe Biden as US President, and his choice of a strong climate team, gives cause for optimism. The European Commission has put forward a Communication on a new EU-US agenda for global change, and an EU-US Summit is foreseen early this year. Better environmental cooperation between the EU and the US is certainly needed. There are however pitfalls to avoid.

The Green Deal foresees a carbon border adjustment mechanism (CBAM) to be put in place to help to deliver EU’s climate objectives while preventing carbon leakage to third countries (e.g. IEEP 2020 and Notre Europe 2020). It has been suggested that this could be an area of cooperation for the EU and the US, with an idea that such a mechanism could be put in place between two large trade-blocs on a bilateral basis, putting pressure globally on others to adopt more ambitious policies (ECFR and Bruegel 2021).

It is important for the EU to encourage US commitment to other global environmental processes than climate change

Although such an EU-US-alliance might seem attractive to some, it could increase tensions between rich countries and the Global South (IEEP 2020). The EU needs to have an open approach that emphasises multilateralism and support to developing countries. If implemented, CBAMs might best be rolled out in a stepwise manner starting with a pilot phase that focuses on a few sectors such as cement and electricity. Product-related policies could be considered as an alternative for some sectors, with the particular benefit of helping to decarbonise not only raw materials but also products downstream.

It is also important for the EU to encourage US commitment to other global environmental processes than climate change, where the policies of the Biden administration are not that clear yet. This includes action on oceans, on chemicals and on waste.

… while continuing to champion multilateralism

To support the above and to avoid strengthening divisions between rich countries and the Global South, ambitious environmental proposals need to be combined with a proactive approach to global health and to the increased debt burden of developing countries due to the pandemic-induced economic crisis. EU support for access to vaccines through the COVAC-initiative needs to be supplemented with other actions, and negotiations on debt relief need to be speeded up.

The EU is a global leader in climate negotiations as well as in other environmental areas. In these ways, climate and environment action have already contributed to a European “voice in the world” and have been a part of soft power. It is also an example of a leading role for the Union in multilateral debates and institution-building., and of the global regulatory power of the EU.

By making the external aspects of the Green Deal – including the impacts of ambitious internal reforms on third countries – a major priority during the coming year, the European Commission and the External Action Service can contribute to more strategic autonomy and better global governance.

Mats Engström is an associate researcher at IEEP